As Pandora Stock Rises (Past Its IPO), How Does Its Market Value Compare to Peers?
— Pandora Media’s turbulent stock market ride continues this week as shares of the newly public company have risen over 50% primarily on speculation the company could be an acquisition target by DISH Network.
With its shares trading at $20.44 in Friday morning trading, Pandora has a market value of $3.26 billion. (By the way, Pandora shares have come full circle. Its offering price was $16 and it started trading at $20. It soon dropped below $13 but has rallied.) That puts it well ahead of the current market values of other music companies such as Live Nation ($2.1 billion) and Warner Music Group ($1.28 billion). Both have capital structures different than that of Pandora, however, which means their enterprise values (basically the cost another company would pay to acquire them) are higher than that of Pandora.
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Pandora’s $3.26 billion market value puts it far ahead of some publicly traded radio broadcasting companies. The market values of Emmis and Radio One are just $42 million and $93 million, respectively. Both had net losses in their last 12-month earnings period. Entercom has a market value of $336 million, 12-month revenue of $391 million and new profit of $46 million. Pandora posted a $2 million loss on revenue of $138 million in its last 12 months.
Investors are valuing the company based on expectations of future performance that far outstrips its financial performance to date. That’s why its market value is 22.6x its recent 12-month revenue. Larger, more mature broadcast companies are trading around 3x their recent 12-month revenue. Sirius XM, which Pandora will battle for share of auto-related listening, has a market cap of $8.72 billion but is worth just 3.1x its $2.8 billion revenue. At $29.92 billion, Viacom’s market value is 3.2x revenue. Discovery’s $11.55 market value is 3.1x revenue.
Even though Pandora has more in common with broadcasters and online media companies (they offer products and services that generate advertising revenue, they compete for a share of consumers’ attention on the same devices), it is currently valued more like another hot Internet IPO. LinkedIn, which went public in May, has a market value of $8.81 billion that is 36x
Light Summer Reading: Google’s ‘Zero Moment of Truth’
— If you’re looking for some weekend reading material, you marketers might want to thumb through an ebook Google has created called “Zero Moment of Truth” (download PDF here: http://google-zmot.appspot.com/google-zmot.pdf). The term, coined by Proctor & Gamble in 2005, according to the book, refers to “a new decision-making moment that takes place a hundred million times a day on mobile phones, laptops and wired devices of all kinds.”
In a nutshell, the ZMOT encapsulates the research and education a consumer does to help with the decision-making process. In the past that gathering of information took place more often in the place of business (market aisle, inside the restaurant). Now information is being gathered well before the buying decision takes place (online user ratings, a menu posted at a restaurant’s web site, etc.). It means that people go online to do research when they run across a product of interest. To that end Google notes it has seen an increase in searches, over time, for food & drinks and beauty & personal care product categories.
How to win at ZMOT? The ebook offers some helpful tips, such as search engine optimization, creating sharable content, use device targeting and use video. Or perhaps the best way to start is to pretend you know nothing about your company’s products or artists and seek out information starting with search engines and continuing through web sites and social media pages. If you don’t quickly see the information you think is most important to consumers, you may need to make some changes.
( Google CPG Blog)
Could Google+ Rival Twitter?
— Google+ may not be a Facebook killer, but it could pose a threat to Twitter, says Peter Yared of web analytics company Webtrends.
“While Facebook is not sweating about Google+, the threat to Twitter is significant. Google has the opportunity to displace Twitter if it gets publishers and celebrities to encourage Google+ follows on their websites as well as pushing posts to the legions of Google users while they are in Search, Gmail and YouTube. Google was turned down when it tried to buy Twitter for $10 billion, and now it is going to try to replicate it. With Google+, the company actually has a shot.”
( VentureBeat)